CFTC Proposes Federal Framework for Leveraged Crypto Trading

The Commodity Futures Trading Commission proposed a new federal regulatory framework on Monday to oversee cryptocurrency exchanges offering leveraged, margined, or financed trading to retail investors. The initiative introduces Regulation Crypto Asset Transactions (CTX) and Regulation Crypto Asset Markets (CAM), creating a specific registration subcategory for crypto asset markets. This move follows the failure of the U.S. Senate to pass the Clarity Act, which would have provided explicit statutory oversight for the industry.

Under the proposed rules, registered venues must implement anti-market manipulation controls and maintain a proof of reserves obligation. The framework requires customer trades to be intermediated through registered futures commission merchants. While the agency will not set specific leverage limits, exchanges must clear all leveraged products with staff. The proposal aims to replace a patchwork of state money-transmitter licenses with a uniform national regime.

CFTC Chairman Philip Selig announced the proposal during a speech at Fordham University, stating the goal is to move away from a regulation-by-enforcement approach toward clear, prophylactic rules. The agency coordinated this strategy with the Securities and Exchange Commission to clarify the status of nonsecurities crypto assets like bitcoin and ether. The framework directly impacts major platforms including Coinbase Global Inc and Crypto.com, while Robinhood Markets Inc is preparing to launch crypto perpetual futures with up to 10-times leverage.